Evaluating the Crash in Graphite Energy Corp (OTCMKTS:GRXXF)

Graphite Energy Corp (OTCMKTS:GRXXF) finally crashed and now appears quite clearly to have been a textbook pump and dump play. We recently covered this one, suggesting that it had technical momentum and a theme focused on selling shares of the stock based on the well-known macro demand idea surrounding the electric vehicle boom. However, we also noted that it appeared as though there was some investor awareness activity going on, which generally makes something a risky proposition. And, on Monday, that proposition got crushed, with GRXXF shares falling over 40% in a straight dive.

The company did also just announce that it has started drilling at its Lac Aux Bouleaux Graphite Property. George Downing Estate Drilling Ltd. of Abitibi, Quebec, mobilized to the drill site last week to commence a total of 300 meters of core drilling. According to the release, “in addition to other geophysical targets, drilling is focused around the old graphite pit area which was the center of historical exploration work in the late 1950s and early 1980s.”

Graphite Energy Corp (OTCMKTS:GRXXF) casts itself as a mining company that is focused on developing graphite resources.

Graphite is one of the most in demand technology metals that is required for a green and sustainable world. Graphite Energy Corp. has state-of-the-art mining technology that is friendly to the environment. Our mine, located in Quebec Canada, has historically been a natural resource for graphite.

With the demand for graphite growing on some of the most prominent and cutting edge industries such as solar and lithium batteries in electric cars and robotics, we have updated our technology to meet the demands of the future.

In short, Graphite Energy Corp operates as an exploration mining company. The company explores graphite and was founded in 2016. In addition, the company is based in Vancouver, Canada.

According to company materials, “Graphite Energy Corp. is a Canadian-based issuer listed on the Canadian Securities Exchange. It is currently engaged in the business of exploration of mineral properties in Canada and holds the right to acquire a 100% interest, subject to certain royalties, in and to the Lac Aux Bouleaux Graphite Property located near the town of Mont-Laurier in Southern Quebec. The Lac Aux Bouleaux Graphite Property consists of 14 claims covering an area of 738.12 hectares. The Company’s objective is to explore and, if warranted, develop the Lac Aux Bouleaux Graphite Property.”

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As noted above, the stock crashed on Monday, and the nature of the action suggests there was an unnatural force propelling shares higher during its recent uptrend, and the pump just turned into a dump that has left the stock full of bagholders now wondering what the heck just happened. Many are likely still holding onto the idea that the prior trend will somehow resurrect itself. In our experience, whenever you see a giant red bar like this on no obvious negative news for the company, don’t expect the trend to re-establish itself anytime soon, if ever.

According to the company’s most recent release, “The technical information contained in this news release has been reviewed and approved by Afzaal Pirzada, P.Geo., a Qualified Person as defined by National Instrument 43-101, of Geomap Exploration Inc. Mr. Pirzada is a member of Engineers and Geoscientists of British Columbia and holds a restricted permit for the Order of Geologists of Quebec (OGQ). He also serves as the President and Chief Executive Officer of the Company.”

We’ve witnessed -7% during the past month, and -40% on Monday, reversing all of the stock’s recent dramatic gains. In addition, the name has seen a growing influx of trading interest, with the stock’s recent average trading volume running 23% over what the stock has registered over the longer term.

At this time, carrying a capital value in the market of $15.8M, GRXXF has virtually no cash on the books, which must be weighed relative to virtually no total current liabilities. The company is pre-revenue at this point. This is an exciting story, and we look forward to a follow-up chapter as events transpire. Sign-up for continuing coverage on shares of $GRXXF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $GRXXF, either long or short, and we have not been compensated for this article.